By Jonathan Stempel
(Reuters) – Two technology trade groups sued the U.S. Consumer Financial Protection Bureau on Thursday to block a new rule giving the regulator supervisory authority over payment apps and digital wallets from large non-banks.
NetChoice and TechNet said Congress did not give the CFPB free rein to aggressively, arbitrarily and capriciously police large non-banks offering consumer financial services through such products as Apple (NASDAQ:AAPL) Wallet, Google (NASDAQ:GOOGL) Pay and Venmo.
The trade groups also said the CFPB identified no consumer risks or gaps in regulatory oversight that justified the rule, which covers companies that process at least 50 million transactions annually, and more than 13 billion overall.
According to the complaint filed in Washington, D.C., federal court, “The bureau failed to show what consumer risks the rule was even meant to alleviate in its haste to dream up a problem in search of a solution.”
The CFPB had no immediate comment on the lawsuit.
In announcing the final rule on Nov. 21, the CFPB said it would help give consumers who use big technology companies for processing payments the same protections against fraud, privacy violations and account closures they enjoy at banks.
CFPB director Rohit Chopra said at the time that digital payments “have gone from novelty to necessity and our oversight must reflect this reality.”
NetChoice director of litigation Chris Marchese in a statement on Thursday called the rule an “unlawful power grab” that could stifle innovation, reduce competition and raise prices.
Carl Holshouser, a TechNet executive vice president, in a separate statement said that the rule could also subject digital payment service providers to oversight of tax payments and other products that go beyond the CFPB’s mission.
It is unclear whether Republican President-elect Donald Trump’s administration or the Republican-controlled Congress might try to change or eliminate the rule, amid expectations they will try to reduce the CFPB’s supervisory authority.
The case is TechNet et al v CFPB et al, U.S. District Court, District of Columbia, No. 25-00118.